Diana positions for low market

Diana today reported net income of $57.6 million for the third quarter of 2008, compared to net income of $50.4 million in the third quarter of 2007 and declared a cash dividend on its common stock of $0.95 per share.

But the Diana board has decided to suspend future dividend payments after this one. It believes this will permit cash flow that would have been devoted to dividends to be used for opportunities that may arise in the current marketplace.

The board has also authorized a share buyback program for up to US $100 million of the company's common shares during the period ending December 31, 2009.

"Our consistent strategy at Diana Shipping has been to maximize returns to shareholders taking into account the highly cyclical nature of the dry bulk shipping industry," noted Mr. Palios. "We have delivered on our strategy. Since we went public in 2005, Diana Shipping Inc. has produced a total annualized rate of return to shareholders of more than 27%. This performance compares very favorably to that of the other drybulk shares, as well as to that of the S&P 500 over the same period. We produced this return during a period of high vessel prices and high charter rates by employing low debt levels and a full dividend payout policy to create a modern fleet.

"We believe we are now entering a period of low charter rates and vessel prices which creates different opportunities to help us produce maximum returns. A suspension of our dividend will enable us to apply our cash flow to these opportunities when we believe we can create long-term value for shareholders.

"Low markets create opportunities. In 1999, we ordered the construction of the Nirefs and three other Panamax vessels currently in our fleet for a contract price of $20 million each, using 75% debt financing. While past performance is not indicative of future results, as you can imagine, our results from the Nirefs and its sister ships have been very good. While we are paying our full dividend for the third quarter, we are suspending future dividends during this period of changed, but enhanced opportunity.

"Our company has one of the lowest debt levels in the drybulk shipping industry. By enhancing our liquidity resources while maintaining our relatively low level of debt, we are preparing ourselves to take advantage of investment opportunities, which will present themselves during this downturn. We have accepted slightly lower rates in order to do business with creditworthy charterers. We have a young fleet ready to meet a change in the market as the downturn ends. In addition, we believe that the present credit crunch will create new market opportunities as there are fewer buyers and lower vessel prices, but also fewer new ships delivered from the shipyards due to financing constraints.

"When market conditions and opportunities change, with our low debt level and by enhancing our liquidity, we will then have the flexibility to support more debt and reinstate our dividend. Management and Board members own over 19% of the shares of Diana and we care about shareholder value."